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Wednesday, December 23, 2009

What Will Business Do?

Yesterday, a caller to Rush Limbaugh made a point that small businesses across America should shut down for a few weeks, lay off their employees, and help flood state unemployment offices with new applicants in response to the healthcare bill. Not just the healthcare bill but the raft of new taxes that will fall on people earning $250K or more. These are small business owners. The basic crux of what he was saying was that business runs the country and not politicians. They should shut down the money spigot and this will make big government plans unworkable.

There is an idea in economic theory regarding tax policy and how high the tax rate has to be to discourage new investment. At what point do excessive taxes literally make it preferable for business people not to work and just shut it down? The president's economic team believes it is 60%. This means that the federales have to take 60 cents of every $1 for business people to finally say: Enough!

How small business responds to their new tax obligations will be interesting. I know enough wealthy people to know that I may have been wrong in thinking that a 40% marginal tax rate was already discouraging. The relatively small sample of wealthy folks I know will probably not scale down the business as a form of protest. Thus, they deserve to be taxed. If you are unwilling to take a stand and shut it down at some sacrifice to your own income than you deserve to have people in Congress tell you what you can and cannot keep. Most of the people in Congress, including the President, have never actually produced much in their lives or created a job or done much more than basically tell others what to do via academic writings. Many of the people passing these laws tend to view business people as mindless sheep with no real intellectual depth beyond just seeking to make a buck. They may be right.

That's why I am interested to see what's going to happen and how the people who are going to pay for all this will respond. I assume they'll take it on the chin, huff and puff, and ultimately just shut up, rollover, and pay the extra taxes Obama and the liberals have in store for them. If they do, they deserve to pay every tax that's been levied on them. And in the coming years when we need to do a massive fix to pay for the looming Social Security crisis, these people will be tapped for that. And the same for Medicare. And the same for Cap and Trade. Politicians are getting away with letting the majority make no sacrifices in terms of paying extra taxes to get these types of giveaways. Why would an average person be against this healthcare reform? Since they pay literally no to little in taxes and will now get healthcare benefits that is cheap and free in many cases, why would you not be for that?

The healthcare taxes are just the first of a lot of future taxes the rich will be paying. I hate to agree with Rush Limbaugh's caller because in almost any normal time it would seem wacky. But this is not normal times and we are morphing into a socialist welfare state that is not the America I thought I knew. I don't happen to be in the position where I have a few million in assets and an income in the $500K+ range so that I would be the one faced with this decision. I acknowledge it's easier for me to write this than for someone else to do this. If the rich can't stand up now, they deserve what they get and should shut up and pay their masters.